2018: The Year of the Consumer
If the 2017 was the year of retailers and brands adopting more technologies, 2018 is setting itself up to focus on engaging with the consumer. With more than 70% of U.S. consumers expecting some sort of personalization from online businesses, providing shoppers with unique and individualized experiences will be necessary for success.
Brands that create personalized experiences by integrating advanced digital technologies and data for customers are expected to see revenue increased by 6 to 10% – twice as much as those who don’t adopt. From on-demand services to 24/7 delivery, consumers crave immediacy and loyalty just as much as the product they are buying.
So, what are a few of the top technologies set to tackle these consumer demands?
E-commerce and m-commerce continue to flourish, but it’s also important to think how to engage and interact with consumers before, during, and after purchases.
Artificial intelligence technology enables machines to use decision-making and learning abilities to solve both real-life and hypothetical problems. An estimated 85% of retail customer interaction will be managed by AI by 2020, with 30% of companies employing the technology to augment at least one primary sales process by then.
Some examples include chatbots, automated programs that stimulate conversations to answer queries, handle specific requests, or even facilitate payment, by mimicking human thinking and decision making. Voice-activated bot personalities are also becoming increasingly popular. Already one in five customers have already made voice purchases through Amazon Echo or other digital home assistants, with a third planned to do so in the next year.
Combining chatbot technology and voice recognition can provide a seamless experience where users can control devices in their own home, get information, order products, and help fulfill purchases. They also provide 24/7 assistance and information without being limited to a time or physical location.
The power of AI technology is the data it gathers by providing a better understanding of the consumer, through capturing feedback and product reviews from users. As they interact more and more with a human, they increase the accuracy of their responses through self-learning. They can then offer more personalized information and solutions based on needs or previous interactions.
Bridging the Gap of Online & Offline:
Brick-and-mortar account for more than 90% of total retail sales, but that doesn’t mean that online is irrelevant. In fact, e-commerce and m-commerce are rising as well. That’s why offering both offline and online services will attract and expand shoppers. For example, self-checkout via mobile, or online pick up in store services.
Blurring the lines between offline and online will also enable more personalization for shoppers. Instead of stores packed with all services, big brick-and-mortar retailers such as Target and Nordstrom are creating smaller, tech-enabled spaces to provide shoppers with an efficient showroom experience.
Nordstrom Local, whose service-focused concept store offers shoppers services such as personal stylists to assist with orders and recommendations. Customers can buy online, pick up in store (with same day delivery), make alterations, or even get a manicure.
Artificial intelligence technology is also reaching the physical stores, by offering personalized “assistants” in fitting rooms and using chat enabled tablets to request additional sizes or colors. Apart from offering a more personalized shopping experience for customers, retailers can use this approach to save on inventory and focus on higher sales.
Leveraging Augmented Reality Everywhere
Augmented reality and virtual reality are not new, but retailers and brands will continue to adopt these technologies to enhance the shopper’s experience. It’s predicted that by 2020, 100 million consumers will shop via augmented reality.
Augmented Reality is set to reconnect physical and digital retail, with 61% of shoppers saying they’d like to shop stores that offer AR. One example is Kate Spade New York who recently launched an AR campaign to promote its first store in Paris. Users can unlock Kate Spade branded illustrations located around the city using an app by scanning attractions such as the Eiffel Tower and Louvre.
Another example is augmented reality start-up HoloMe which teamed up with an up and coming British fashion brand, RIXO London to create a holographic version of the catwalk show for users to watch at home. Models wore pieces captured in AR from the designer’s latest collection.
Even Tim Cook, CEO of Apple understands the importance of AR in apparel. In a recent Vogue interview he commented on providing audiences with an online experience for catwalk shows. “If you think about a runway show in the fashion world, that’s a great application of AR, because some of these, you want to see the dress all the way around, you do not want to see just the front.”
Speed is a necessity, not an advantage:
Speed is key to survival in the retail world with large companies experimenting with new delivery tactics, curbside pickups and drop off lockers to get orders to shoppers as fast as possible.
More than half of retailers say they now offer same-day delivery services, up from 16% last year, and it’s expected to grow. With leading players such as Amazon, the push is on for retailers to get items delivered to customers as soon as possible.
Various startups such as Deliv, are partnering with over 4,000 businesses and e-commerce companies to offer same-day delivery that rivals Amazon’s Prime now.
Inventory and logistics may be a challenge, which is why it will be important to team up with startups such as Deliv , or logistic providers such as DHL and UPS, that provide delivery solutions to meet the demand of the consumers.
Providing same-day services is a big opportunity for retailers to win customer loyalty. However, there are potential challenges such as real-time overview of inventory stock, short fulfillment lead-times, and shipping costs that need to be taken into consideration. Consumers are willing to pay if it costs less than 7-8% of their basket value, but companies will need to see to what extent they can fulfill these services alone or to work with logistics partners.
These trends are just a few set to conquer the industry in 2018. At the end of the day, the retailers who will prosper will embrace technologies to offer physical and digital experiences. The key to success will be understanding consumer needs of speed, quality, and personalization, and providing those services both online and offline.